Massachusetts Housing Market on Mend

RISMEDIA, March 2, 2007-(MCT)-A sharp rise in January home sales and modest price declines indicate that the Massachusetts real estate market may be recovering from its worst slump in more than a decade.

The number of single-family homes sold rose almost 13% in January compared to a year earlier, the first increase in the last 10 months, according to the monthly housing report released this week by the Massachusetts Association of Realtors. Sales were strongest on the South Shore of the Boston metropolitan area and on Cape Cod. The median price of a single-family home fell to $340,000, 2.4% lower than a year ago but virtually unchanged for the past four months.

"It's been a long time since we've reported we had an increase in sales," said Timothy Warren, chief executive of Warren Group, a Boston real estate research and publishing firm that also tracks sales data. "I'd call it a hopeful sign."

A warm and virtually snowless winter deserves some of the credit for the strong sales. But the most significant factor fueling the housing market this winter, agents and analysts said, may be the improving affordability of homes in one of the most expensive real estate markets in the country after several months of falling prices in 2006.

Larissa Duzhansky, a housing economist for the Lexington consulting firm Global Insight, said falling prices "may be a sign of stabilization" because homes are becoming more affordable. Massachusetts experienced record price appreciation during the state's housing boom of 2002 through 2005.

"We had the overvaluation problem," which was "one of the things that drove us into this correction in the first place," she said. "We're less overvalued if prices fall, and sales are beginning to go up."

Gail and Sean Tierney first put their Foxborough split-level home on the market in October for $429,000. Earlier this month, they dropped the price to $397,900. "We just got an offer," Gail Tierney said yesterday. The couple, who had already purchased a bigger house to accommodate two growing boys, ages 7 and 9, were relieved.

"It's a thrill," she said.

Norfolk County, where Foxborough is located, posted the biggest January sales increase-9%–of any Massachusetts county, according to Warren Group, which breaks down its sales data by county.

"Buyers really do want to buy but they're afraid of making a mistake," said the Tierneys' agent, Gil Campos of Re/Max Real Estate Center in Foxborough, which closed 30% more sales last month than a year earlier. "The magic right now is, if your house is in really good condition and priced right, it will sell," he said.

Real estate agents statewide told of a flurry of recent activity that could reverse a trend of shrinking commissions in 2006. They reported their open houses are busier and buyers who window-shopped last year are now putting deadlines on finding a house. Some sale listings have even elicited multiple bids, they said.

Analysts were more cautious than agents and warned that a one-month sales hike — particularly in January, a traditionally light month — is no assurance that the market is destined to rebound in 2007. And while price declines have been good for buyers, it's unclear whether homeowners will see the value of the properties start to rise again this year, Warren said.

"It's quite possible the number of sales will be up for the whole year. My question is prices, whether they will be up for the whole year," he said.

Beverly agent Linda O'Connor of Realpro Associates said buyers "are pawing over things like it's Filene's Basement." But they are buying, she said. While sales in Essex County, which includes Beverly, dropped 4.34% in January, she saw "very strong pockets of activity," especially for houses priced above $750,000.

"It's almost as if there was a jump-start" in the high-end market, she said, though all price ranges are attracting more prospective buyers.

One client, Eve Geller-Duffy, moved to Lenox and was anxious last year to sell her Cape-style home in Beverly so she could buy a new place in western Massachusetts. Last year's market was "very tough," she said.

Her listing price, which started at $420,000, dropped over the year but the house attracted little interest and then "terrible offers." Last fall, she agreed to a sale but that deal fell through.

Then she dropped the price to the $350,000 range, and "a buyer appeared," she said.
This time, "Linda made it go smoothly," said Geller-Duffy, who, relieved, closed the house sale on Monday.

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